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Real Estate Gifts
Your property can benefit you, your family and Scouting in Central Texas.
We welcome gifts of real estate, whether improved or unimproved, and we also welcome gifts of mineral interests or associated royalty interests. Depending on the gift method, you may enjoy tax savings, lifetime benefits, or relief from holding costs.
When considering a real estate gift, we need to know the type of property you would like to donate as well as how you prefer to structure your gift. Some of the more common methods of giving include:
- Outright gift: A current gift of your real estate
- Charitable remainder unitrust: A gift of real estate into a trust that provides payments to you or beneficiaries you designate for a specified time
- Retained life estate: A gift of real estate where you retain certain interests, such as the right to enjoy your property during your lifetime
- Bequest: A gift of real estate in your will
- Transfer on death deed: A deed executed today that takes effect only upon the death of the grantor, which allows the property to be conveyed outside the estate of the deceased
The Capitol Area Council, Boy Scouts of America, can provide more information about the tax benefits of these and other gift methods. Please contact Matthew Menely at (605) 290-6699 or [email protected].
How to make a gift of Real Estate
1) Contact our council office to discuss the type of property you would like to give and your preferred gift method.
2) Provide copies of the following (if you have them in your possession) to our office for initial evaluation:
- the deed under which you took title to the property;
- any survey;
- any leases, management agreements, or restrictive covenants, and other pertinent information; and
- any financial information related to the estimated value of the property and carrying costs for the property (e.g., taxes, insurance, maintenance, HOA or condominium dues, utilities).
3) In most conveyances, our council will seek to obtain a title commitment and title insurance at its cost.
4) Depending on the type of property, our council may conduct environmental or other type of inspections before accepting the property.
5) Depending on the method used to donate the property and your tax situation, obtaining a “qualified appraisal” in accordance with Internal Revenue Service Publication 561 will likely be necessary and beneficial. Our council will work with you in obtaining any required appraisal.
6) Our council will review the information and, assuming there is no reason to not accept the property, we will provide the necessary acceptance decision in writing.
7) Later a deed is prepared, which you will execute, along with any other required documentation the law, the title company, if any, and your own legal counsel may require. The title company or our council will then record the deed.
Obtain the Qualified Appraisal
When real property is donated to our council, it is likely that the donor will need to obtain a “qualified appraisal” to be able to take the proper tax deduction. The Internal Revenue Service’s (IRS) Publication 561 describes how to determine the value of donated property. The appraiser should be familiar or become familiar with Publication 561 in order to deliver a report acceptable to the IRS.
The qualified appraisal must estimate the value effective not more than 60 days prior to the gift date. The appraisal must be obtained within the time required to file the tax return. The IRS also requires that you, your appraiser, and our council complete Form 8283, which you will attach to the tax return. For gifts valued more than $500,000, you must include the appraisal with Form 8283 attached to the tax return.
Our council will assist in facilitating the appraisal report if required.
If the property is later sold within three years, our council must report the sale to the IRS and to you (Form 8282). If the sales price is substantially less than the amount you claimed for the deduction, the IRS may challenge your deduction. To avoid this result, the appraisal should be accurate and well documented to avoid a challenge when the property may have later been sold for less than the market value at the time of the gift.
Make arrangements to transfer the property to our council
Once our council has approved the proposed gift, we will coordinate with you and your legal advisors to arrange for the title transfer, including in coordinating the preparation, execution, and recording of the necessary documents (with or without the assistance of title company as the case may be).
The date of the gift is usually the date on which the title to the property is transferred to our council.
Other Considerations or Notes
For retained life estates, you are responsible for carrying costs as long as you live or until you release the retained life estate.
For a charitable remainder unitrust, you will be responsible for making contributions to the trust to cover the carrying costs until the trustee sells the property. Note that your gift to a charitable remainder unitrust to cover carrying costs is considered an additional charitable contribution, a portion of which is generally deductible for tax purposes.
A transfer on death deed is revocable during your lifetime.
Persons to whom you later give a power of attorney should be made aware of your intentions regarding real property in which you retain an interest so as not to undo what you intended.
Gifts of remainder interests limit your deduction to a portion of the appraised value of the real estate.
Our council cannot provide tax or legal advice but can assist your tax advisors with the calculation of your charitable tax deduction.